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Goldman's 11 Best Consumer Stocks for 2011

9. Nike (NKE - Get Report) was removed from Goldman's Conviction Buy List on Jan. 3, but retained its "buy" rating. Goldman still believes that Nike's story is compelling, but is now overly-appreciated by investors. Nike is one of the world's most recognizable brands in footwear, sportswear and apparel.

It has grown sales and earnings per share 4.6% and 7.2% annually, on average, over a three-year period. The stock has risen 29% in the past 12 months, but it now costs 16-times forward earnings and 16-times cash flow, only modest apparel peer group discounts.

Goldman's $95 target suggests another 16% of upside in Nike's shares, which are generally favored by analysts. Currently, 14 researchers rate them "buy" and six rate them "hold." Nike receives no "sell" ratings. Both Credit Suisse and Barclays are predicting an advance of 21% to $100. Goldman sees multiple sales drivers over the next 12 months, including an accelerating product cycle and exposure to burgeoning international markets, with nearly 50% of sales coming from outside of the U.S. Furthermore, Nike is more insulated from cotton, which is on a run, than many of its competitors and it has a diverse sourcing base, which should help profit margins remain afloat.
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